Part 2: Political Reality and the Way Forward for Renewable Energy

New Hampshire, U.S.A. --
Political heavyweights know this about their rough-and-tumble game – you project victory long before the results are in. And when you think you've won, you never give your opponent an opening.

In Washington, it’s hard enough to craft legislation even in relatively amicable times. In the tense atmosphere on the Hill today, meaningful legislation takes a ringside seat, and the game becomes theater.

That’s where we are now. In one corner is the House budget, essentially the Republican Party’s line in the sand that’s been drawn over the size of the federal government. A key component of this is the federal government’s more limited role in supporting a clean energy future. In the other corner is the White House and the Democrat-controlled Senate, which has vowed to stonewall any legislation that it says caters to the super-wealthy and the entrenched fossil fuels industry.

Like two tired boxers in the ring, they’re content to leave it in the hands of the judges — in this case the voters, who will in many ways determine the force with which our federal government pursues a national policy built on clean energy. But the real prospects for any meaningful legislation is likely to come after the election, when the rhetoric cools and when political capital comes due. Until then, most industry observers don’t expect much chance of any real federal renewable energy legislation passing through a divided Congress. That means no Clean Energy Standard, no revival of the 1603 Treasury grant program, no extension of the Production Tax Credit until the end of the year at the earliest.

There are just too few vehicles that can be used to pass any of the measures, and too little trust between key negotiators to find find common ground. One of the last best hopes — the transportation bill — included an amendment that addressed some of these concerns. Ultimately, the amendment went nowhere, and the renewable industry was left looking months down the road to when something could get resolved.

The question now is will it be too late. For 1603 to be brought back to life, it would require a major shift in thinking, especially in the House. The PTC has a better shot, but international players in the wind industry are already indicating that they’ll get out of the market if the credit tied to energy produced expires. Will they wait around until the end of the year to see if it can be revived? It’s increasingly looking like the answer may be no.

Some Rays of Hope

Rep. Bobby Rush, D-Ill., is the ranking Democrat on the House Subcommittee on Energy and Power. According to his legislative director, Tim Robinson, there is less acrimony surrounding energy policy inside the chamber than it appears in the daily news accounts.

Robinson says that renewable energy and how it fits into our national economy has support on both sides of the aisle. Even those who are the most strident about limited government don’t necessarily see more renewable energy and less federal support as mutually exclusive. That viewpoint hasn’t necessarily been evident in the high-stakes House hearings on the Solyndra bankruptcy and the Department of Energy loan program.

But, according to Robinson, “We’ve had other hearings where you do have expressions coming from the other side of the aisle that make it clear that they see renewable energy as part of the mix.”

Even the notion of subsidies, he says, has the potential to draw the two parties closer together. Robinson was pointing to the recent push to get all subsidies out of all energy as they type of legislation that is attractive to some at the surface but one that causes deeper problems once its impacts are scrutinized.

“Members [of the House Subcommittee on Energy and Power] understand each sector has started out at a different place, that newer forms of energy started in the game later,” he said. “Members will be able to resist the allure [of extreme cuts] and do something more surgical and appropriate.”

Jeffrey Anthony, Director of Business Development with the American Wind Energy Association, also sees support from individuals in both parties for legislation that would help maintain growing manufacturing bases. That support, he says, is too often trumped by the party politics that dictate how the agenda is set. “It’s tied to the current political environment which is not conducive to moving legislation forward, even legislation that has broad support of both Democrats and Republicans.”

While it’s growing increasingly unlikely that anything can pass before the election, there is hope that legislators can achieve some of these goals in the short window between the end of the election and Inauguration Day. That could prove to be a period of political horse-trading in which a flurry of legislation pushes through amid a harried call for cuts.

According to Rhone Resch, President and CEO of the Solar Energy Association, all the political rhetoric about balancing the budget and reducing the deficit is laying the groundwork for fundamental tax reform.

“This sets up an extender bill in late November or early December,” said Resch about a bill that could lead to a more comprehensive package that would have serious implications for all renewables. “We’re very, very cognizant that in an election year, and afterwards, how we do fiscal reform in the country and the impact it will have for solar.”

Speaking Out Industries

That sets up the big question for those in all the renewable industries. What can be done between now and Election Day to ensure that voters have a clearer understanding of what benefits the industry brings to the table. Maybe it’s jobs. Maybe it’s the environment. Maybe it’s about American ingenuity and the need to stay ahead.

This much is clear, though. The industries need a cohesive message, and they need to find a better way to coordinate and get that message out to rank-and-file voters. That message, say industry and political experts, is what’s needed to push legislators to ensuring that clean energy finds itself with a prominent seat at the table once budget cuts come down.

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15 Comments

The energy business is 100% about economics. Sure, resources like gas, coal and oil are finite, but they are still very plentiful and economical. There is direct relationship between the widespread availability of low cost energy and the rapid technological advancement of mankind over the past century.

The world will never really run completely out of oil, coal or natural gas. Due to the immutable force of free market economics (that you apparently despise), the imbalance between supply and demand will push oil/gas prices beyond what the market will pay. And some other form of energy will take its place. Just like how coal replaced wood, and kerosene replaced whale oil and beeswax.

I have been investing substantial amounts of my own time and money over the past few years working to develop a technology that will make commercial wind more cost competitive. Rather than squawking about inequity of the free market economy, why don't you do likewise and commit your own time and money to solve the problem, rather than simply whining about it?

Lastly, the earth does not have a "closed system". Solar radiation continually transfers huge amounts of energy to the earth. At the same time, much of that energy is radiated back into deep space. If the earth was truly a "closed system", there would exist a state of equilibrium where no energy was gained or lost. Of course, you also need to consider that much of the world's energy consumption goes towards manufacturing materials such as steel, plastic or PV solar cells. Thus, much of that fossil fuel energy is just being sequestered in the end product.

After reading the posts, some of you are quite knowledgeable and credible on your views. However, none of you have taken into account the views of the public, us taxpayers who are collectively paying 30% of the subsidies, including those of us who oppose the destructive technologies. There are multiple citizen opposition groups, like here in eastern Kern County near the Tehachapi Pass, San Gregorio Pass and Altamont, across the nation, North American, Europe and Australia who are living with technologies touted as 'green' that we consider to be complete scams. We witness what will be the complete collapse of ecosystems for 1000s of square miles just in California. Environmental, waterway, wetlands and endangered species acts have been tossed aside like meaningless trash for nothing more than profits and property tax money for cities and counties. Fish and Wildlife and environmental groups are bribed to ignore the bald eagle and California condor losses. Laws are changed to allow for 'takes' of endangered species that would cost us $60K and jail time for killing one. Our counties ridicule the citizens as mere whiners because our homes will permanently loose value caused by severe noise and red light cast into the night sky from required red beacons on structures at 200 or more feet, that must be observable for 40 miles. Mojave has literally hundreds of blinking lights. Now the solar subsidies are becoming popular so the Mojave Desert is being invaded. These technologies only cater to the monopolies, investors and government. I see hundreds of turbines from my property and from my perspective, they are only intermittent sources of energy. Industrial solar/wind are 100% destructive to the land they occupy. Both will tie the people the grid and strangling energy costs. After watching 3 years of this development, my opinion is for 100% investment in r & d to identify best of breed solutions for rooftop solar at the source of use to become a gridless nation.

Here are 3 simple points that Americans can understand:
1) Competition is good.
2) Monopolies, mandates and subsidies are bad.
3) Exemptions to environmenal laws are also bad.

Fortunately,
1) in my region, at least Illinois has adopted competition (even though MN, IA, SD, Neb, KS and MO are corrupt).
2) the US is being forced to get rid of subsidies before it goes broke (eg PTC).
3) unreliable generation is starting to get punished by curtailment.
4) even some Republicans dont believe fracking should be exempt from environmental laws.

The political reality is this: The more facts you include, the more our politicians and the general public yawn. Unfortunately, we live in a lowest common denominator society. Mike, Gerald, and Phil all have good arguments. But, it took more than 15 seconds and three points to say it. I wish it were different.

Most of us agree renewable energy is a requirement for the future of civilization as a whole. How do we, the people who understand the pros and cons from most angles, keep the attention of an attention deficit public long enough to pass meaningful legislation? How can we, who can't seem to agree on anything, present a united voice?

Personally, I don't think we can. There is no end to the squabbling. For our own sake, we need to pick three points and agree on them. Distill it into a 15 second argument and drive it home over, and over again.

I said there are no CREDIBLE studies for wind power integration, not there are no studies. The US does everything it can to avoid the issue or make wind power look better than it is.

Here in Minnesota, we had the "Minnesota Wind Integration Study" in 2006. The study serves as the basis for adding wind power to 25% of generation. But it is a total fraud. The state's political leaders, utilities and environmental groups misrepresented the costs of integration by assuming the wind power could be dumped into the MISO market, which is over 10 times as large as the Minnesota market, and thus they actually determined the costs of integrating only 2% wind power.

The "U.S. Large-Scale Integration Studies" calculates the costs and benefits of using 20% wind power from the difference in operating, but not capital, costs compared to natural gas generation, while also assuming inflated gas costs and carbon taxes.

Here's a concise whitepaper that takes a look at the integration issues: http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline;+filename%3D%22REDI+Report+(Full+Version).pdf%22&blobheadervalue2=application/pdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251746588129&ssbinary=true

Since I am located near the Great Plains, I gave wind the lower cost of 8.2 cents and about 10.2 cents after removing the federal accelerated depreciation subsidy (which EIA should not have included in the cost study).

Moreover. if you look at the 2008 study, you will see the average wind cost is 14.7 or 5 cents more than the average of 9.7 in 2009. They lowered the cost only because they expected the PTC to expire and only the best wind sites to be used. If the PTC is continued, wind costs are expected to rise to nearly 15 cents average before full transmission costs and integration.

The EIA estimate as of 2011 is clearly 9.7 cents average as printed on the page in Table 2 'Regional Variation in Levelized Cost of New Generation Resources, 2016' with a range of 8.2 to 12 cents (in 2009 dollars). LBNL gives 316 $/kW as the median transmission cost in practice. EIA says 313 $/kW average based on models before CF is factored in.

BTW, I'm not suprised that models show higher costs as they cover a whole range of options while practical studies are generally selective to the most cost effective options.

I used the low EIA cost of wind power 8.2 cents. But EIA inappropriately included federal accelerated depreciation so the cost is actually over 10 cents. And the cost is even higher by 5 cents if the PTC is continued because more poor wind sites will be used (see EIA 2008 costs).

Mike-Holly: you are confusing what LBNL said with what EIA said. EIA estimate is completely theoretical and worst case. LBNL is based on analysis of many real proposed or actual projects and paints a different picture.
EIA estimates the average cost of wind power at 0.097 $/kWh (0.082 to 0.12) so >= 0.010 in less than half of the cases modeled. For comparison, they estimate clean coal at 0.136 (0.126 to 0.154) and clean natural gas at 0.0893 (0.081 to 0.104). While the cost of thermal plants is appreciating with time, the cost of wind farms is depreciating. Wind is already cheaper than clean coal and will be cheaper than clean NG within 5 years, at least according to EIA estimates.

NG peaking is already a part of the system. Until wind capacity exceeds 50% of demand variability, the peakers that are already in the system will still do the job of matching supply to demand. In as much as variable renewables displace thermal plants, the main impact will be higher duty cycles for existing peakers which will make them more efficient not less, if by efficient you mean greater utilization of capital. Solar in particular, which is largely synchronous with peak demand, will have even less impact than wind and will not require more peakers than currently deployed to match firm generation against variable demand until it exceeds ~70% of demand variability. In future, one could reduce the need for NG peakers by addressing the current low utilization of hydro: at 42% CF where 66% is feasible, the US is near the bottom of the pack (approaching China which built a lot of big dams but not enough transmission capacity). At 0.086 $/kWh, hydro is the cheapest clean source (EIA estimate). But then, in the US, a lot of NG has been deployed as an antidote to congestion: reducing congestion will free up a lot of NG capacity. Solar and wind close to load will reduce congestion.

So, it seems the adoption of appropriate technologies for energy is mostly curtailed by the lag inheirant in a corrupt political system that actually knows nothing in itself, and appears to be enabled by established monetary returns to the legislators that decide supports and incentives and tax law and its loopholes for the wealthy......(one hand feeding the other).
............... It seems the national problem is not now one of energy, but of old money in control of.............. everything economic and social. This system will not cut off it's feet to save it's face, except as a last measure. So, if the 'neo rich wanna be's' are expected to solve the problems of energy, it will only defer them or push them back or elsewhere.
Since the basic motivation of the political establishment is to keep the labor force strapped to the plow of capital generation that supports them, how will the insiders and deciders be led to understand the benefits of distributed energy when their same-old main motivation is still far too stabil, and that their future may be tied to solar adoption?
..........Their future is only the next election cycle, not the society at large. The industries are learning that energy costs must advance slowly, (like cooking frogs alive), while the utilities get into position to own and control the energy supplies of the future. Solar building code cost extremes are seen. Ute wind and solar farms (with govt help), are becoming more prevalent now as they are drawn by a slumbering populace to feed them. Perhaps it is time to 'occupy' our homes and lives.

@JohnIhle There is no role for renewable biomass power (potentially the lowest cost technology) in the US where use is shrinking while subsidized wind is booming, because of the utility monopolies, mandates and subsidies distorting the market.

Mike, most would say there's a role for all renewable energy technologies. When comparing integration cost, tax treatment and other hidden costs of wind vs other fuels it may be appropriate if you compare apples to apples. From a few key view points things may be more complicated then your comments infer and are likely nuanced more so with respect to utility by utility, regional, weather and as well as subsequent loads...and so much more.

Curtailing wind may have more to do with antiquated transmission systems and changing dynamics. However, there is a role for wind.

Solar obviously has its role. In my opinion its distributed benefits far out weigh any other technology we have today. Not to mention hot water applications which unfortunately is all too often overlooked.

State and federal policy have favored and still favor fossil fuels too much. The way things have been done in the utility industry do not favor "free markets". The winners were selected a long time ago. The utility and fossil fuel industry pretty much own the air waves. There are significant environmental aspects that are not widely reported on such as those available through studies, for example, from the American Lung Association. RE efforts been a battle and will continue to be so.

In spite of huge obstacles that continue to be in place, the paltry amount of RE grants facilitating R&D (relative to coal, gas, etc), subsidies in place for well entrenched industries, exemptions (fracking) which are costing Americans in terms of health, money, etc. that RE pricing has come down considerably over the last 3 + decades.

Continuing efforts will further bring costs down for all RE. Then, as storage becomes economical it may be a game changer.

I think we all need to be ever mindful of the economic and environmental degradation which stems from the use of fossil fuels and keep pushing hard on legislators that is inclusive of all RE technologies.

I enjoy when people just talk about the economics of energy generation. It completely ignores the bigger question of finite resources. At some point we have to recognize that after oil is gone, coal and natural gas will follow. It is likely that if we burn every last drop of fossil fuels we will have impacted our atmosphere so drastically that population control will no longer be an issue. Closed systems have a way of finding balance and I for one would rather see a smooth transition to non-emitting, sustainable energy sources prior to their running out.

Free markets would decrease generation costs and increase the use of renewable energy. The EIA projects new crop-based industries producing fuels and chemicals will yield wastes for free fuel and heat needs for cogeneration that will make biomass the lowest-cost generation (4.8 cents per kWh) and only source gaining market share.

Biomass could be about as cheap as natural gas, whose low costs are mostly due to a 2005 exemption given to the shale gas industry allowing them to avoid the Safe Drinking Water Act and dump unknown chemicals into water wells during a process called "fracking."

Monopolies, mandates and subsidies have been favoring wind power. Cost projections from the EIA indicate wind power costs are over 10 cents per kWh. They receive tax shelters, including the PTC (2.2 cents), federal MACRS accelerated depreciation (2 cents) and state accelerated depreciation and other exemptions (1 cent). There are also benefits hidden in confidential utility contracts.

In addition, the EIA doesn't even include the subsidies wind power receives for transmission imposed on ratepayers. The Lawrence Berkeley National Lab reports the low capacity of wind power results in transmission costs that are triple those of other generation sources (another 2 cents).

But the lack of any credible integration studies is likely the biggest problem. As backup from inefficient natural gas peaking is required, total costs are increased by about 6 cents per kWh. Moreover, the combination will use as much natural gas and emit as much carbon dioxide as just using more efficient combined cycle natural gas generation without wind power.

Markets with high levels of wind power like Ontario and Texas are already curtailing the unreliable output of wind power, making wind power uneconomic even with excessive subsidies.